By Anthony Varrell, May 10th, 2019 —
One of the most exciting opportunities for cannabis companies is related to the international cannabis market and this is a significant trend to be following. During the last year, we have been closely monitoring the international cannabis opportunity and Israel is a market that excites us.
Earlier this year, the Israeli government approved legislation that allows for the export of medical cannabis from Israel to countries that have explicitly approved the import of cannabis. The export market will be under the supervision of the Israeli authorities and would allow medical cannabis license holders that meet certain quality standards to export medical cannabis to specific markets.
One of the main reasons we are favorable on the Israeli cannabis opportunity is due to the country being a first mover the medical cannabis market as well as the economics associated with the cultivation of cannabis. For more than 50 years, Israel has been researching medical cannabis and we are favorable on the knowledge that the operators have when it comes to the medical opportunity associated with cannabis. In Israel, cultivators can produce premium cannabis for a couple cents per gram and we find the economics associated to be very attractive.
Isracann: An Emerging Israeli Cannabis Company
Last month, we highlighted Isracann which has been laser focused on the Israeli cannabis opportunity. The company is focused on becoming a premier, low-cost cannabis producer and has significant leverage to the Israeli cannabis market. Currently, Isracann has secured three farms with cultivation licenses totaling 580,000 sq. ft. and we will monitor how the team is able to execute on this opportunity.
So far this year, Isracann has been executing on a plan to further strengthen its balance sheet and fully fund the buildout of 232,900 sq. ft. of cultivation facilities that can produce approx. 23,500 kilograms of premium cannabis per year. One of the important aspects of this opportunity pertains to this facility and how it get licensed. The company’s facility is planned to be a IMC-GAP/GSP certified facility that will be constructed to meet all regulatory standards.
In Q1 2020, Isracann expects to complete its first harvest and plans to ramp up from there. The facility offers the company significant room to expand and we are favorable on this. We expect to see increasing demand for Israeli cannabis products and the focus on increasing production capacity is important for the company’s growth potential
2019 has been a significant year for the emerging cannabis company and we are impressed with how Isracann has advanced its story. One of the reasons we are excited about this opportunity is due to the recent additions to the management and advisory team. During the last year, the company has done a great job when it comes to making strategic additions to the team and we are monitoring how they execute going forward.
Cronos Group is Capitalizing on the Israeli Opportunity
Out of the Canadian Licensed Producers (LPs), Cronos Group (CRON.TO) (CRON) was a first mover on the Israeli medical cannabis market and we have been favorable on the growth opportunity associated with this burgeoning opportunity.
Last week, the Canadian cannabis producer announced plans to expand its research and development (R&D) program by opening a facility in Israel that will be focused on cannabinoid devices. The new facility is expected to support Cronos Group’s efforts to develop next-generation vaporizer products for cannabinoid applications. The facility will serve as the global center of Cronos’ R&D program for vaporizer devices and we will monitor how the team is able to execute on this opportunity.
In late 2017, Cronos Group entered the Israeli market and the company intends to export medical cannabis products from Cronos Israel once operations have commence. Through a relationship with Kibbutz Gan Shmuel the company is working on the production, distribution, and research of medical cannabis in Israel.
Through Cronos Israel, the companies will produce premium medical cannabis and manage the entire supply chain production process. We are favorable on the skills that both companies bring to the table and will monitor how Cronos is able to execute on this burgeoning cannabis market.
Tikun Olam is a Private Opportunity to be Watching
Tikun Olam is one of Israel’s leading suppliers of medical cannabis and has been operating under a license from Israel’s Ministry of Health since 2007. The company has a first move advantage on the Israeli market and is well positioned to capitalize on this opportunity. Over the next year, we expect to see the company’s domestic and international operations become even more significant and are excited about its growth prospects.
From plant to patient, Tikun Olam is a vertically integrated company and the founder of the world’s first professional cannabis nursing clinic. The company has been capitalizing on the United States legal cannabis market and Tikun Olam plans to continue to expand its presence in this burgeoning market.
From Florida to California, Tikun Olam has been able to build off its initial success in Delaware and we will monitor how the team continues to expand its reach. The company also has a significant presence in the international market and we are bullish on the growth prospects associated with this.
Tikun Olam is privately held and we think this is a company to watch as it continues to execute on its business plan and increase it leverage to the rapidly growing legal cannabis market. The company is levered to one of the fastest growing markets in the world and has amazing brand awareness. The recent focus on leading cannabis brands makes Tikun Olam and even more attractive opportunity and we will continue to monitor this opportunity.
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